Surface Transportation Board calculates rail industry's cost of capital for 2011
(Surface Transportation Board press release, September 13, 2012)
WASHINGTON, D.C. — The Surface Transportation Board announced today that it has issued its decision calculating the railroad industry's cost of capital for 2011.
In Railroad Cost of Capital — 2011, Docket No. EP 558 (Sub-No. 15), the Board found that the rail industry's after-tax cost of capital was 11.57 percent. Last year, the cost of capital was 11.03 percent.
The cost-of-capital figure represents the Board's estimate of the average rate of return needed to persuade investors to provide capital to the freight-rail industry.
Calculated annually, the cost-of-capital figure is an essential component of many of the agency's core regulatory responsibilities. The Board uses the cost-of-capital figure in evaluating the adequacy of individual railroads' revenues each year. It also uses the figure when determining the reasonableness of a challenged rail rate, considering a proposal to abandon a rail line, or valuing a particular railroad operation.
The Board's decision in Docket No. EP 558 (Sub-No. 15) is available at the Board's website at www.stb.dot.gov.
Monday, September 17, 2012